Realtor.com September Home Shopper Surveys Point to Big Shift Ahead

Older Millennials (25-34) dominate current home shoppers, making up 33% of the market. First-time buyers account for 52% of the future buying potential.

Top goals among all home shoppers are privacy, family needs, and asset accumulation.

Most desired features in homes are good-quality construction, larger yard and located in a safe neighborhood.

Primary triggers of home shopping are tiredness of current home, favorable home prices, and change of family circumstances.

Concerns shared among home shoppers are finding a house within budget and/or fitting their needs, and a lack of funds for down payments

The peak of summer home buying season just passed, and the cycle is rebooting. In September, 34% of Realtor.com site visitors planning to purchase reported they just started to explore and need more time to research their future homes. And 52% of the home shoppers set their eyes on 7 or more months from now, which is next spring and summer. This presents September as the perfect time for thinking ahead about the 2017 housing market and what consumer demands will be in the upcoming buying season.

A typical consumer has competing objectives in buying a home. According to our panel of survey respondents, the top goal is to have more privacy; shoppers allocate 18 points out of 100 available points to wanting a place of solely their own. Family comes second; our shoppers assigned 16 points to needs of their immediate family and children. The third goal is to grow assets and wealth through homeownership, with 13 points allocated to this goal.

A wide range of reasons trigger consumers to consider buying a home. Being tired of their current home is on the top of the list with 26% of the respondents. Another 17% consider favorable home prices as the trigger, and change of family circumstance and composition comes in third with 16% of the home shoppers.

Consumers vary significantly in product type preference. 56% of shoppers prefer single-family detached houses, while another 24% prefer town houses, row houses or single family attached houses. Only 8% consider condos as their preference.

Similarly, location also varies with the suburbs as the dominant stated preference. 50% of home shoppers prefer suburban areas (both closer-in and outlying suburban areas).

Consumers look for a variety of home attributes for their next homes. Our survey asked home shoppers to allocate 100 points across 20 key attributes of homes and neighborhoods. Overall, quality of construction, larger yard/lot space, and safer neighborhood are of utmost interest, with each earning an average allocation of 9 points.

Conversely, shoppers are least interested in houses with less space, being in an established neighborhood, or having mature trees and landscaping.

Shoppers face many different impediments in their quest to buy a home. For people who have been seriously searching for more than three months, the top two impediments are that they haven’t found a house that meets their needs, and/or they can’t find a house within budget. With tight supply and lack of new construction, they have been the top impediments throughout the year.

52% of the shoppers in September identified themselves as first time buyers. This represents an enormous shift compared to the 33% first time buyer share we saw in September 2015.

Privacy, family needs, and wealth accumulation are still topmost goals of first-time buyers.

First-time buyers are even more likely to be motivated by lack of satisfaction in their current living situation. 34% of them express being tired of their current home, compared to 28% overall. 30% of them are home shopping due to getting married/moving in with partner. And 22% of them are looking for a safer neighborhood.

39% of first time buyers prefer townhouses/row houses, compared to 25% of overall population. And 32% of them would consider single-family detached house as their top preference. This likely reflects that consumers are making conscious tradeoffs that to stay within budget, they are opting for attached product types that enable them to be in more desirable locations.

In regards to home features, first-time buyers put even more weight on safe neighborhoods and more living space. Least desired features are less living space, community amenities, and having mature trees and landscaping.

Financing issues are even more profound for first time buyers than overall buyers. 37% of them express that they lack enough funds for down payments, and 28% of them need to work on improving credit scores. These numbers are significantly higher than for overall buyers.

Age Demographics

Housing is fundamentally driven by age demographics, and different age groups have nuanced preferences and impediments worth studying.

Older Millennials, who are aged 25 to 34, account for 33% of active home shoppers. Represented by the largest numbers, they are the dominant shopping demographic in the market.

Through our September survey data, we can see that 74% of 25-34 year old Millennials are first-time buyers. As a result, they share a lot of common attributes with first-time buyers.

These older Millennials tend to be more family and investment focused, yet they value the 10 goals most evenly of all age segments. Being tired of current living arrangements, getting married/moving in with partners, increase in family size, and desire to live closer to good schools are their primary motives to purchase a home.

Attached properties are desired by 34% of this cohort, which is the highest among all age groups. Moving into a safer neighborhood is the top requirement, followed by larger yards/lots, and good schools. Top issues for this group is the down payment, as 32% of them report not having necessary funds for a down payment as an impediment.

The youngest of Generation X, who make up most of those aged 35 to 44, are another 23% of active shoppers. 45% of them are first-time homebuyers. This is the group that put the most emphasis on their family and children’s needs. Out of 100 available points and 10 goals, they put 22 points into this category. And they also value privacy highly with 21 points. Primary triggers are being tired of current home, change of family circumstance, and favorable home prices.

From this age group and older, single-family detached homes become strongly preferred. 63% of Generation X shoppers prefer single-family detached houses. They are the only group that prefers outlying suburb slightly more than suburban areas closer to urban core.

Larger yard/lot, proximity to good schools, more living space, and quality of construction are desired features.

Their top impediments are that they cannot find a house within budget or fit their needs.

Older Gen-X and younger Baby Boomers, who are aged 45 to 54, account for 17% of our active shoppers. 31% of them are first-time buyers.

This is the age range where we start to see a shift of preference towards privacy over family needs. While being tired of current homes and change of composition are still top triggers, this group is most sensitive to interest rates, as 17% of them consider low interest rates as top trigger.

This age cohort is low density oriented, and single-family detached homes dominate their preferences. Quality of construction, larger yard/lot space, and safer neighborhood are most desired features.

Older Baby Boomers, who are aged 55 to 64, account for 17% of the shoppers. Privacy is a top goal, and growing financial wealth is just as important. Physical comforts and amenities are also highly valued.

This cohort is thinking about retirement as 35% of them named retirement as the top trigger for buying a home, and 18% of them are relocating to a new city.

They are lower density oriented, and 70% of them prefer single-family detached house. Besides good quality of construction and larger yard, convenient locations to friend and family are most valued features.

Finances are less of a problem for this cohort. Their main hurdle is that they haven’t found the house that fits their needs.

The most mature segment of the population, older than 65, account for 6% of our shoppers. Physical comforts are primary goal, followed by privacy, and family needs. A desire to live closer to their family and friends are primary trigger, as well as retirement and favorable interest rates.

Convenience to friend and family, quality of construction, and lower maintenance cost are most desired features.

See the age break downs of our September 2016 home shopper surveys in our interactive graphic below.